Month: May 2021

Friday assorted links

1. The Danish film Another Round is perhaps the best film ever made about alcohol.  It is also a movie about Denmark.  Reviews are quite positive, but it is poorly understood by the critics.

2. “Quebec needs its own emoji ‘as soon as possible,’ say legislators in unanimous vote.

3. Goethe in China.  Supposedly Xi as a teenager read Faust multiple times and knows it by heart.

4. Fabio Ghironi thread on research killers.  And Ross D. has some further picks for influential intellectuals.

5. China proposed markets in everything; as I like to say, the best argument for “Woke” is to read the MR comments section.  And since it constitutes a strong argument for a proposition (whether you agree with the view or not), that makes it a very very good comments section.

6. Weird stuff that might be possible, even if I don’t quite trust this piece.

7. Biden climate policy and the median voter (NYT).

Individualism Promotes Benevolence

NYTimes: On average, people in more individualist countries donate more money, more blood, more bone marrow and more organs. They more often help others in need and treat nonhuman animals more humanely. If individualism were equivalent to selfishness, none of this would make sense.

…individualism promotes a more universalist outlook. In focusing on individual rights and welfare, it reduces the emphasis on groups — and the differences between “us” and “them” that notoriously erode generosity toward those outside one’s own circle.

See also my posts Globalization and the Expanding Moral Circle and Testing Doux Commerce in the Lab.

Should you make it easier for people to apply?

We study how search frictions in the labor market affect firms’ ability to recruit talented workers. In a field experiment in Ethiopia, we show that an employer can attract more talented applicants by offering a small monetary incentive for making a job application. Estimates from a structural model suggest that the intervention is effective because the cost of making a job application is large, and positively correlated with jobseeker ability. We provide evidence that this positive correlation is driven by dynamic selection. In a second experiment, we show that local recruiters underestimate the positive impacts of application incentives.

That is from a new AER piece by Girum Abebe, A. Stefano Caria, and Esteban Ortiz-Ospina.  I find this claim very interesting, though not completely general.  You will note these results are for clerical positions in Ethiopia, and note further “The impact of ability of application incentives is driven by women, and by those jobseekers who are currently unemployed and less-experienced.”  It is possible that the ease of application improves the applicant pool for those with a confidence gap, yet who are talented nonetheless.  I might add that the easy nature of the Emergent Ventures application (it really doesn’t take long and requires no reference letters or vita) reflects a similar logic.

In the context of this study, it is not just that some of the higher quality candidates apply for the money, rather the money is also a signal that the application process truly is open.  Otherwise why pay for applicants?

That said, for jobs or awards that are more creative than just clerical labor, you want to give each application close scrutiny and that may militate against encouraging more and more applicants.  You might even want “knowing to apply in the first place” to be the biggest test standing before the final prize.  What better way to test for networks?

So the mix of “hard to know about at all, easy to apply once you do” will in fact fit some situations fairly well.

Austin Vernon on digital dollars (from my email)

I was curious about if banks had many use cases for stablecoins, so I talked to [redacted] who works at a nationwide bank that focuses on small business lending. The use case he mentioned was that sometimes they need cash very quickly to stay within their requirements but wires are slow and cumbersome. If you could use a crypto network, the settlement time in minutes would be a big advantage.

The mechanics don’t quite work out because they would also want to use a product that does not change valuations compared to dollars. Stabecoins should fit the bill, but to transfer stablecoins from one bank account to another you would have to wire or ACH someone like Coinbase, do the transaction on chain, then withdraw the money from coinbase. So it would not be fast.

It is possible to imagine where every bank has their own stablecoin backed by US dollars they hold 1:1. It’d be like the days of banks issuing their own gold back notes. If Alice Bank needed more USD, they could borrow from Bob Bank. The actual mechanism might be that Bob Bank uses cash reserves to instantly create USDB and sends the USDB to Alice Bank’s wallet. Alice Bank then goes to Uniswap and trades USDB for their own USDA stablecoin. Alice Bank then retires those stablecoins and releases cash from their stablecoin cash reserves into their general fund. Any customer of Alice Bank or Bob Bank could do this same transaction with other bank customers to have cash faster than an ACH.

Can this happen today? Uniswap 3.0 is a leap forward for adding liquidity for automated market making and is especially beneficial for stablecoin transactions. There are practical limits on small transaction sizes and very large transaction sizes. The biggest practical transaction is limited by liquidity in the trading pools. Uniswap 3.0 should make this much larger than previous automated market makers, the actual amount depends on how much liquidity the market makers provide. The smallest size is limited by fees. Uniswap is launching Layer 2 scaling very soon, but the scaling is optimistic roll ups that utilize fraud proofs. If the banks were only transacting in Layer 2 this would not be a problem, but with fraud proofs it can take one week to take funds out of Layer 2 into the main Layer 1 chain. ZK-SNARK based roll ups would fix this, allowing instant settlement, and are progressing rapidly, but aren’t available yet. Blockchain technologies are still somewhat immature for this use case, but that capability is rapidly approaching.

Banks are so regulated they may not want to get involved without regulators giving them a nod. If the government favors a digital dollar, they may not want to give that nod. I think China has made its preference clear. They want a digital yuan and independent crypto networks will be subordinated. Very soon governments and central banks might have a choice between writing 100 pages of regulation that clarify standards for registered banks creating stablecoins and de facto creating a digital dollar system or embarking on a very large project to create their own digital dollar that requires much more work and owning implementation risk.

Will be fun to watch!

Thursday assorted links

1. Ross Palmer YouTube review of Average is Over.

2. Why do scientists lie?

3. “We find that differences in taxation alone explain 44.7% of US-EU differences in health expenditure-GDP ratio and more than 70% of their differences in time allocation.

4. Jason Furman speaks truth on “overheating labor markets,” though in my view it goes much further than that.  The evidence on this one really is not there, and that has been well-known for decades.  Wages are at best moderately pro-cyclical (and that’s not even getting into causality), and for decades Keynesians were trying to argue they are not pro-cyclical at all.  Except now.

5. Do the “Big Five” personality traits predict SES?  And how much should that matter?

Matt Yglesias on the dynamics of Twitter

Social media is truly social in the sense that it features incredible pressures to form in-groups and out-groups and then to conform to your in-group. Unless you like and admire Cotton and Pompeo and want to be known to the world as a follower of Cotton-Pompeo Thought, it is not very compelling to speak up in favor of a minority viewpoint among scientists. Why spend your day in nasty fights on Twitter when you could be doing science? Then if you secure your impression of what “the scientists” think about something from scanning Twitter, you will perceive a consensus that is not really there. If something is a 70-30 issue but the 30 are keeping their heads down, it can look like a 98-2 issue.

I do not know a lot about science, so I will not opine how generally true this may or may not be.

But in economics, which I do know well, I think it’s a big issue. If someone tweets something you agree with, it is easy to bless it with an RT or a little heart. To take issue with it is to start a fight. And conversely, it’s much more pleasant to do a tweet that is greeted with lots of RTs and little hearts rather than one that starts fights. So I know from talking to econ PhD-havers that almost everyone is disproportionately avoiding statements they believe to be locally unpopular in their community. There is just more disagreement and dissension than you would know unless you took the time to reach out to people and speak to them in a more relaxed way.

My strong suspicion is that this is true across domains of expertise, and is creating a lot of bubbles of fake consensus that can become very misleading. And I don’t have a solution.

Here is his full Substack post, I am very happy to be a paid subscriber.  The broader question of course is what we can do to limit these problems.  More pseudonymous tweeters and writers?  More grumpy old people who don’t care so much about their reputations?  More who write for Substack?  Other?

Fractional Dosing Trials Now!

Fractional dosing has the potential to massively increase the supply of COVID vaccine. The Moderna Phase I clinical trial and Pfizer Phase I/II trials already indicated a substantial immune response with smaller doses but the vaccine companies are under-incentivized to run additional fractional dosing trials (they won’t gain trillions, at best they will gains billions and might even lose some profit) and governments and private organizations are not picking up the ball. There are just two small trials underway that I am aware of:

N.B. now that we know that the vaccines work. we don’t need to study every dosage for efficacy against the virus. Instead of efficacy studies we can study how the vaccine is working in the body compared to those fully immunized, immunogencity trials (which is what the above trials are doing) and then use data and theory to infer effectiveness. If we felt it necessary to study effectiveness, human challenge trials would be ideal in this situation as you can study gradually smaller doses with little risk to the patients. But given the urgency, immunogenicity trials should provide enough information to make decisions on the ground. To limit risk, one could do a half-dose on the second dose or one could do a half-dose in people under the age of 50. Both of these regimens would still create significant increases in supply. Recall that in 2018, facing a yellow fever epidemic and a shortage of vaccine, Brazil used 1/5th doses to break the epidemic.

There are no guarantees but the world is ignoring a potential trillion dollar bill lying on the sidewalk.

Hat tip for discussion: Witold and Amrita.

CBDC, monetary competition, and monetary separation

That is the topic of my latest Bloomberg column, and here is one excerpt, related to earlier ideas from the New Monetary Economics:

The most common worry is that a central bank digital currency, or CBDC, would lead to disintermediation, with individuals or wholesalers putting their money into a CBDC system rather than commercial banks. The result would be fewer loans and less private-sector economic activity.

CBDC proponents typically say regulation can fix this problem. They favor some combination of issuance limits on CBDC units, CBDC access for wholesalers and major players only, or penalty interest rates or fees on CBDC holdings.

Yet all of these ideas create barriers — you might even call them “capital controls” — between ordinary dollars and CBDC dollars. If there are limits or barriers to dollar-to-CBDC conversion, dollars and CBDC units will not sell for the same price. Why should they? They perform different functions for different clienteles. Of course if the Fed allows unrestricted conversions, a one-to-one price would be enforced by arbitrage. But such open and unfettered privileges are precisely what policy advocates are seeking to limit.

The result would be a bit like the Chinese system. The yuan has for a long time had one value within China and another in world markets, with the difference being enforced by capital controls. And with a Chinese digital currency on the way, China may soon have (at least) three different currency prices.

In this new world, people will ask whether the U.S. dollar unit of account refers to “ordinary dollars” or to CBDC dollars. There might be two competing “dollar units of account” — or, more plausibly, retail prices would continue to be denominated in terms of ordinary dollars and the CBDC would have a floating exchange rate with respect to these “retail dollars.”

…the price of the CBDC dollar would become both a major policy variable and a major indicator of where central bank policy is headed. To what extent does the Fed wish to allow transactions, intermediation and resources to flow into the CBDC-linked sector? Current debates about open-market operations or interest on reserves will become arcane and outdated. The regulations roping off the CBDC sector from the retail-dollar sector would become truly significant, and would give the Fed (and other regulatory parties) much greater influence over sectoral allocation.

Over time, the CBDC financial sector would become much larger, as more of the economy digitizes and demands the hypermodern CBDC payment and settlement system. That would mean that the dominant U.S. currency — the CBDC dollar —would be fully separate from the mainstream accounting unit, namely the retail dollar.

Whether some other currency might replace the U.S. dollar as the world’s reserve currency is a perennial debate. Maybe the real alternative to the dollar is … the CBDC dollar.

There is further relevant analysis at the link.

My Conversation with Mark Carney

Here is the audio, video, and transcript, definitely recommended.  Here is part of his closing statement:

COWEN: Last question. You wake up each morning. Surely you still think about central banking. What for you is the open question about central banking, where you don’t know the answer, that you think about the most?

CARNEY: I gave a speech at Jackson Hole on this issue, and I started — which is the future of the international monetary system and how we adjust the international monetary system.

I’ll say parenthetically that we’re potentially headed to another example of where the structure of the system is going to cause big problems for the global economy. Because it’s quite realistic, sadly, that we’re going to have a fairly divergent recovery with a number of emerging, developing economies really lagging because of COVID — not vaccinated, limited policy space, and the knock-on effects, while major advanced economies move forward. That’s a world where rates rise and the US dollar strengthens and you get this asymmetry, and the challenge of the way our system works bears down on these economies. I think about that a lot.

And this:

COWEN: If you’re speaking in a meeting as the central bank president, do you prefer to speak first or speak last?

CARNEY: I prefer — I tend to speak early. Yes, I tend to speak early. I’m not sure that’s always the best strategy, but I tend to speak early. I will say, one thing that’s happened over the years at places like the G20, I noticed, is the prevalence of social media and devices. The audience drifts away over time, even at the G20, even on a discussion of the global economy.

And from the horse’s mouth, so to speak, do note this:

CARNEY: …I think you’re absolutely right on that, there wasn’t. It is revealed that there wasn’t a liquidity trap.

Rooftops!  Finally, on more important matters:

COWEN: Are the Toronto Raptors doomed to be, on average, a subpar NBA team due to higher taxes?


COWEN: What’s the best Clash album?

CARNEY: Fantastic question. London Calling, and one of my best memories — I was very fortunate; they came to Edmonton when I was in 12th grade in high school. I went to the concert and that was fantastic, yes.

COWEN: I also saw them, I think in what would have been 12th grade had I been in school that year. But London Calling is too commercial for me. I much prefer the Green album, like “Career Opportunities,” “Janie Jones.”

CARNEY: Well, “I Fought the Law” was the best song at the concert. I have to say, they had got to Combat Rock by this time, which was relative — [laughs] Combat Rock was more commercial, I thought, than London Calling, although they threw it all out the door with Sandinista!

Again, here is Mark’s new book Value(s): Building a Better World For All.

*Modern Paraguay: South America’s Best Kept Secret*

There should be more books serving as introductions to individual countries, and this one, written by Tomás Mandl, is a fine entry in the genre.

…Paraguay was South America’s first country to get electricity, railroads, and an iron foundry.

The Triple Alliance War of 1864-1870:

Although available data and sources remain contested, estimates put the figure at 25 percent of the Paraguayan population killed on the lower end, and upwards of 60 percent on the higher end…

For purposes of contrast, Poland during WWII saw “only” about 20 percent of the population killed.

Under Stroessner, the torture centers were neither secret nor undercover.  And:

The clear pattern post-Stroessner is one of mild support for democracy: While in 2017 more Paraguayans agreed with the claim “democracy is preferable” than in 1995 (55 percent versus 52 percent, respectively), the average for the period was 46 percent….When Latinobarómetro asked Paraguayans to assess their country’s political regime on a range where 1 is “not democratic” and 10 is “fully democratic,” they have responded “5” consistently in almost every year of the twenty-first century.

With mandatory voting the average turnout rate is about 66 percent in recent times.  And:

Notably, the largest center for Paraguayan studies is located in Argentina.

I enjoyed this sentence:

Unfamiliarity with Paraguay is not new.

Paraguay has very low FDI even by Latin American standards, it is typically rated as the most corrupt country on the continent, and a common saying is “¿Con factura o sin factura?”

Highly recommended, you can pre-order here, and yes the author does speak Guarani and he does also know the Solow growth model and why Singapore is interesting.

Cheating markets in everything

  • This phone shaker device can achieve your weekly fitness goal without efforts, unlocking rewards at distances in Pokemon Go.
  • The phone walker is ideal for those people who are doing corporate steps challenges to get rewards with freebies for getting fit.
  • The step counter device features three kinds of working modes, running mode(fast speed), jogging mode(medium speed) and walking mode(low speed).
  • It can earn 9,500 steps(running mode) in an hour equivalent to 4 miles approx, cheating your way to 10,000 steps in a short time.
  • It is compatible with any IOS and Android’s smart phones whose width is less than 3.6”. If you have any questions, just feel free to click the contact seller button

Here is the Amazon listing, via Ben M.

Tuesday assorted links

1. “There are about 465,000 open positions in cybersecurity nationwide as of May 2021, according to Cyber Seek — a tech job-tracking database from the U.S. Commerce Department — and the trade group CompTIA”  Link here, though if you bring up skills mismatch you still get shouted down these days.

2. One-minute Covid breath test approved in Singapore (Bloomberg).  And my early April Covid predictions.

3. Predicting high-impact science.  And Ashlee Vance on Celine Halioua and her anti-aging start-up and work (Bloomberg).

4. The importance of immunocompromised individuals for Covid issues.

5. Ross Douthat on Foucault is completely correct (NYT).

6. Brain synchronization remains an underdiscussed topic (NYT).